ALC Executive Subcommittee: Aug. 14, 2025

Representative Les Eaves Alright, members, if you could go and grab a seat, we’re going to get this meeting of Executive Subcommittee called to order. Members, we are still working to get the motion picture folks online for that presentation. So for now, we’re going to skip Item B and move down to Item C. It’s consideration of an emergency rule by Department of Shared Administrative Services. We have Mr. Grant Wallace. Or Jessica Patterson. If you would, just when you get sat down, hit your button and introduce yourself for the record. And then you can tell us about your emergency rule. Is yours on? Okay, you’re good now. Hello, Grant. 

Grant Wallace Grant Wallace, Director of Employee Benefits and Office of Property Risk. 

Jessica Patterson Jessica Patterson, Chief Legal Counsel for Shared Administrative Services and Director of the Office of State Procurement. 

Representative Les Eaves Okay, go ahead and present your rule. 

Insurance emergency rule (Approved)

Grant Wallace So the emergency rule you have before you really is just putting into rule the kind of operational aspects or early days of the captive program. It delineates claims that were prior to July 1, 2025, and how those were going to be treated and then the ones that came after July 1, how we were going to treat those. The first section dealing with mitigation services. 

Obviously, in some of these instances, we don’t want to delay in being able to stop further damage from being done. So this just gives us the ability to allow mitigation services to be done quicker than just the normal procurement process. And I’ll let Jessica kind of speak to that if there are any questions on that. But with that, be glad to answer any questions. 

Representative Les Eaves Senator Rice, you’re recognized. 

Senator Terry Rice Hello, Grant and Jessica. Good to have you here today. In the rulemaking deal, I would just point out because of something that I’d heard of on one of my local school systems is to keep in mind– you talked about mitigation and you got to get some stuff done sometime. 

But sometimes when there is a dispute, something can be vastly on whether it’s hail damage or not hail damage, how much and all. I’d just ask to keep in mind what a process would be to allow some fair way to be able to do that for the school systems. There’s always that between insurance companies and others, but there needs to be a fair dispute. 

Grant Wallace And there are additional rules, more permanent rules that are coming that would probably be the appropriate place to address those issues. 

Senator Terry Rice Thank you. 

Representative Les Eaves Thank you, Senator. Members, any other questions? Ms. Patterson, do you have anything to add to that, or are you good? 

Jessica Patterson No, unless there are questions. I’m happy to answer them.

Representative Les Eaves All right. Seeing no other questions, without objection, the proposed emergency rule is reviewed and approved and the review and approval shall be effective upon adjournment of Legislative Council meeting this Friday, August 15th. Thank you. Members, next takes us to consideration of an emergency rule for the Department of Corrections. We have Miss Elaine Lee, Miss Tawnie Rowell and Mr. Trent Rigdon. If you would just introduce yourself for the record and you can begin presenting your rule. 

Tawnie Rowell Good afternoon, Tawnie Rowell, chief legal counsel for the department. 

Representative Les Eaves I don’t know why that one’s not working. Try one of the others. 

Sentencing length for new offenses (Approved)

Tawnie Rowell All right, there we go. Good afternoon, Chief Legal Council, Department of Corrections, Tawnie Rowell. So we have in front of you a proposed amendment to the rule that is promulgated by the Arkansas Sentencing Commission that sets out which offenses are required to serve 25 and 50% of their sentence. Y’all passed quite a few criminal offenses this legislative session. Of those, only two went onto the 50% list. One was Fleeing Class A, and the other was Coerced Abortion by Fraud. 

That brings that 50% to 26 total offenses. The remainders all went on that 25% list. There’s 408 total on that now. Fleeing Class A– the Class B felony is actually 100%, so that one’s on the 50% until this body has an opportunity to decide whether they want that Class A to be a 100% or not. This actually should result in a net savings to the state just because the rule as it was drafted two years ago provides that if an offense is not set out as a 50% or 25% in the rule, it automatically defaults to a 50%. 

And as you know, one of the charges of the Sentencing Commission is the efficient utilization of state correctional resources, so that’s just what this does. And as soon as it’s ready to go, then we can push forward with permanent promulgation. And I’ll take any questions. 

Representative Les Eaves Alright, members, any questions? Seeing none, thank you for your testimony. Members, without objection, this proposed emergency rule is reviewed and approved, and the review and approval shall be effective upon adjournment of Legislative Council meeting this Friday, August 15th. All right, members, that takes us to Item E. It’s consideration of an extension of the publishing and editing of statutory materials agreement between BLR and Matthew Bender & Co. I believe we have Ms. Jill Thayer and Kevin Koon. 

Jill Thayer Jill Thayer, Bureau of Legislative Research. 

Kevin Koon Kevin Koon, Bureau of Legislative Research. 

Jill Thayer So you should all have in your packets a copy of a publishing and editing of statutory materials services agreement. This is the Bureau’s contract with Lexis for the publication of the statutes, the code. The current contract that we have expires this December. The code revision commission at its last meeting authorized the entering into the automatic renewal term that starts upon expiration of this contract. The contract provides for two automatic renewals. But because it is a contract that Marty will have to sign and has to continue, we need Legislative Council approval. So the Code Revision Commission gave that recommendation for approval. And now we just need the same from y’all if that’s your desire. We’ll answer any questions that you may have. 

Representative Les Eaves Thank you for that. Members, any questions on this one? Seeing none, I’m going to need a motion to approve. The motion. Second. Any discussion? All those in favor, signify by saying aye. Opposed? It’s approved. Thank you. Members, that takes us back to the top. We’re still waiting on the motion picture folks to sign on. Yeah, members, if you would, we’re going to skip back down to Item F. And Marty has an announcement that you need to hear. 

New website for code of rules

Marty Garrity Back in 2019, Senator Dismang and then-Representative Dotson, along with the legislature, passed an act creating the Code of Arkansas Rules. It was assigned to the Bureau of Legislative Research to create a website and a program where all of the agency rules were going to be housed in one location. This was an enormous project, but when you talk about good government, this is good government. We had agency rules that could be found in someone’s drawer. There were old rules on agency websites. 

Our staff has worked for the past six years to create this website. It’s a lot of tears and efforts, and I actually have to thank the Governor’s office as well as the agencies for working with us to create this. So it is up and running as of January 1. And this last week, I believe, at the Administrative Codes and Registers Conference, our program and our website received the Robert Colburn Jr. Innovation Award for our Code of Arkansas rules. And it’s really a big honor. 

And I have to thank my folks for doing really just an immense amount of work. Isaac Linam, Rebecca Miller-Rice. We had a huge team of editors and attorneys. That put a lot of effort into this program. And again, I can’t overstate what an impact this will be for the citizens of the state of Arkansas. This is a whole lot of transparency for agency rules in one location. So I just wanna let y’all know this is good stuff. So Senator Dismang was the Senate sponsor. I didn’t want this, but we got it. 

Representative Les Eaves Thank you, Marty. That’s fantastic. We sure, all of us, I know, appreciate the hard work that BLR  does on our behalf. So thank you very much, Senator Dismang also. Thank you for your foresight in this. Grateful. All right. Thanks, Marty. All right, members. We have the motion picture folks signed on now. So we’ll skip back up to the agenda Item B. We have Miss Mina Sadler– excuse me, Miss Meera Sadler and Mr. Leon Forde. Did I get it right? 

Leon Forde You did. Thank you, Chair. 

Representative Les Eaves You’re recognized to go ahead and present. 

Motion Picture Study report

Leon Forde Thank you. I’m not going to share any slides. I’m just going to speak for a couple of minutes and then be very glad to take any questions. Our company, Olsberg SBI, was retained by the Bureau of Legislative Research to undertake a study on the Arkansas Digital Product and Motion Picture Incentive, which we delivered and the full study is now online. It’s a pretty detailed piece of work, so I’m just going to pull out some key findings and numbers for you today. 

Just a quick word on scope. The study we were asked to look at the economic impact of digital product and motion picture incentive and make a set of recommendations around the structure, the administration and other elements with a view to helping Arkansas maximize future economic contributions of the screen production sector. 

A quick word about context, what we found– and Meera and I spent some time in state, both in Little Rock and northwest Arkansas– so we found that the state does have a small but lively industry for screen production. But it has struggled for consistency. And part of that is about larger macro factors coming out of the COVID-19 era. The investment in screen production is recalibrating, but a big part of the inconsistency was the state incentive, which is currently not optimal in terms of its structure or in terms of its budget. 

State investment and ROI totals

It runs with an annual system budget of around $4 million, which is significantly lower than Arkansas’s neighbors– neighbor states, I should say, and significantly lower then some of the competitors. And just to flag that these sort of automatic incentive systems, film and television, are very widely used. There’s about 120 of them. Globally, and there’s a lot of competition for screen production dollars. So to have a system that has a very low budget and is fairly unpredictable, and how that is funded is not optimal. 

We did find there is an opportunity to build a more stable sector, which I’ll come onto. Just to flag some numbers for you, we looked in our economic work at fiscal year 2014 up until fiscal year 2025 to date. And what we found was that through the Arkansas cash rebate and the tax credit model, the state had invested about $19.7 million over that time. We used the state outlay to estimate qualifying production expenditure, which isn’t tracked. 

The state only tracks the amount it invests in these productions. But we were able to use the incentive rates to estimate qualifying production, which we found to be about $94 million over the fiscal year 2014 to 2025 period. So almost $20 million invested by the state and almost $94 million in qualifying spend. 

To flag a couple of key economic impact numbers– and if you are interested in these numbers, there’s a lot of detail in the full report. But to pick out three overall metrics which combines all channels of impacts, so direct, indirect, and induced, we found that the incentive had delivered– or production spending going through the incentive had delivered just over $54 million in total GVA between 2014 and 2025. And in terms of GVA return on investment, that was about $3.62 in value created for every dollar spent. 

In job terms, film and television production is largely a freelance workforce, so we look at full-time equivalent jobs and we found that the peak average over the time frame we were looking at was about 600 full-time equivalent jobs in fiscal year 2018, which was the busiest year in terms of film and television production in the state and a kind of model of how many jobs could be created if Arkansas was to keep attracting production at that same level, which it isn’t consistently. 

And then just finally, before questions, we were asked to set out a number of key questions. I’ll pick up on four very briefly. The key one coming out of the study is around the incentive. As I say, these are key sectoral development tools for screen production and the Arkansas model is not competitive. It has a low cap, $4 million, and has not been consistently funded, creating some uncertainty in the state. 

Study recommendations

Our recommendation is that Arkansas considers expanding this tool if the state wishes to expand the screen production sector. And we think a sort of $20 million cap rather than a $4 million cap would enable a sort of meaningful change in building the size of the industry and creating a more consistent production industry annually. And we include some sub-recommendations there around the type of incentive and some provision for the lower budget projects that tend to film in Arkansas. 

We also recommend a cohesive industry development strategy alongside any expansion in the incentive. In doing our consultations in the state, it was clear that the industry is fairly unconnected and fairly uncohesive. So having a strategy that builds the industry, if a new tool like the Incentive is expanded, having a central development strategy would be important. 

And then finally on the Film Commission and on data, the Film Commission, when we were doing our study, was a one person office, which did not compare favorably in personnel terms with Arkansas’s neighbors who have similar offices but more staff to operate them. And we recommend an expansion of that office and more industry involvement to ensure that it has the resources to take a more proactive role in building the sector. 

And then finally on data that, one of those issues behind the lack of cohesion that we found was that there was a lot of uncertainty about how much incentive investment might be left in any given year, what the usage of the incentive looked like, what the production throughput in state looked like. And that was limiting for workers in the state who were unsure where they could find opportunities. 

So again, a recommendation around improving that data site. As I say, very, very quick headline results from the study, which is now fully online. And be very glad to answer any questions that you may have. 

Representative Les Eaves  I have a quick question. I’m looking at some of the charts in here and you’ve got Arkansas comparing to Oklahoma, Texas, Louisiana, and Mississippi. Can you give me some idea– I think we’re all aware that Georgia has a pretty robust film industry. How does Georgia compare to the states that you have shown in these charts? 

Comparing tax credit caps

Leon Forde Yeah, it’s a great question. And we’ve undertaken an economic impact study of the Georgia State Incentive. I mean it’s very much one of the largest, if not the largest, incentive models in the United States. It’s an uncapped model, which means that the amount of incentive or the amount of tax credits has no cap.

 So technically the industry can service an unlimited amount of production. And because of that we’ve seen a large amount of investment in infrastructure like studios and a lot of crew growth as well. But as we say in the report, that’s not the only approach that we see in other states. Many of the ones we found similar to the Arkansas level do have caps, which enables the legislature to control the annual investment that they’re making into this industry and have a sense of how much is going to be spent on that investment. 

Representative Les Eaves Do you have any sense of what sort of economic activity that means to Georgia, the way they do it in terms of dollars? 

Leon Forde We do have those numbers. I’d need to pull them out of our files, but it was a public report that we undertook in Georgia, so I’d be very happy to circulate. 

Representative Les Eaves If you don’t mind, send that to staff and we can get it to the membership. 

Leon Forde Of course. 

Representative Les Eaves Thank you. Co-chair Gilmore, you’re recognized. 

Senator Ben Gilmore Thank you. So I’m looking at page 9, figure 2, where you have some findings and recommendations and perhaps– and I’m sure there’s going to be other questions related to this, so not going to ask you to belabor it. A couple of things there that give me concern. So, I’m sort of wanting examples, perhaps, where you talk about lack of clarity, transparency, cohesiveness. Strong words. Can you elaborate on what led you to that? 

Confusion around availability

Leon Forde So a few things. I mean on the lack of clarity side, what we found was– and this is particularly relevant when we’re thinking about investors or producers coming to Arkansas or looking at Arkansas with a potential investment in a project– generally the first thing that the producer like that will do is they will have a long list of potential production destinations, usually based on creative elements, the story, the setting, the locations, and always including an analysis of the cost base and the incentive. 

And what we found is that when those producers were looking at Arkansas, the fact it’s funded by the Governor’s Quick Action Closing Fund, there’s real uncertainty around, is money available for this production right now. If you think about the financial risk that a film or television production involves, many millions of dollars, in productions going to Georgia, sometimes talking about hundreds of millions of dollar, that risk becomes unpalatable for those producers and leads them to choose jurisdictions that are clearer, that are more sort of stable in that information. 

And even within the small incentive funding that Arkansas has, we found that the sector often– one key issue is that they often had no understanding of whether there was any money left in the fund for that year, whether it could fund more production service, more productions. So just that lack of knowledge and certainty about the incentive side was a very, very significant problem. 

Senator Ben Gilmore And then I think the last finding there, where you mentioned limited level of interest, what kind of data– so speak to that, if you would, where you talk about published data is limited. What should there be available? 

Leon Forde So I think, yeah, this was a key recommendation. And I think the lack of information here is around some of the incentive processes. So there’s some technical elements to that recommendation, which is some people were just unclear in practice how certain elements of the system worked. But then also the sector itself, some of those sort of stakeholders we spoke to were uncertain what productions were coming in. 

We spoke to a lot of crew members who often only found out about productions when it was too late for them to be connected with potential job opportunities. And there’s always a bit of a dance there because productions like to, for their intellectual property, they don’t want to announce that they’re going to be filmed. 

But we do see in some other jurisdictions a much more proactive sort of data and publishing of information to alert the sector that this production is coming in three months and is crewing up, here’s who you can contact if you’re interested. And that wasn’t necessarily happening as much as we thought it could have in Arkansas. 

Representative Les Eaves Thank you. Speaker Evans, you’re recognized. 

Economic Development vs Parks & Tourism

Representative Brian Evans Thank you, Mr. Chair. Over the last two or three weeks, I’ve had the opportunity to visit with some legislative colleagues from other states in the southeastern part of the United States who have very robust film programs. And I see in your packet, your firm has been doing this for north of 30 years. 

So, a lot of experience. How often with the states that you’ve worked with has it been your recommendation to move the film office out of Economic Development into Parks and Tourism? Because the states that I talked with, theirs is in Economic Development. So curious as to why the recommendation here was to do that. 

Leon Forde Yeah, thank you for the question. And there’s a number of reasons for that. I think, again, going back to the sort of resourcing and the cohesiveness point that we were talking about, I think that the natural home for film commissions is often Economic Development because incentives are economic development tools. 

I think what we heard– we spent time in state talking to some of your legislative colleagues about the economic strategy for Arkansas on a more general basis and heard a lot about the visitor economy and the growing tourism sector in Arkansas. And it felt to us that this could be an opportunity to revisit whether a different department would be more suitable for the aims of building the film production sector. 

And as I say, that’s set against the context, which is that in the years we’ve been talking about the aim of the incentive, which was to expand the industry, had not really happened. So we were looking at options to try and drive that change and considering the department in which the key film commission agency is housed within was one of those options. 

Representative Brian Evans So if I understood what you’re saying, it’s not necessarily always your recommendation to do that. You just find Arkansas to be unique to where it’s better suited to move it there. 

Leon Forde Yeah, all of our work in each state or jurisdiction we work in is completely bespoke to that. It’s not a kind of standardized recommendation by any means. I mean, if we do this type of work in any jurisdiction, we’d look at the formulation of key offices, which we did in this instance. And, yeah, I think on an international basis, these offices tend to be economic development more frequently but also tourism and some other departments as well. But yeah, this was a specifically Arkansas consideration. 

Representative Brian Evans I may have missed it in the report, but in the conversation I had in other states– it may be the same thing, just different terminology that we speak here versus what they speak there– but you mentioned quite often the incentive. And if I understand it, the incentive that you’re recommending here is a tax credit buyback. But other states that I’ve talked with talk about a rebate. Is there a difference? Is that the same thing, just someone’s terminology is different than others? 

How rebates / credits work

Leon Forde In part, yes. And we’d be very happy to share, we have some literature on the the verbiage and how things differ. But in general terms, the film and television incentives on a global basis are structured in sort of two headline ways. One is as a cash rebate, which is the production undertakes the spend and the jurisdiction refunds a portion of that cash, that production cash that was dropped in the economy. 

And that happens after an audit and after checks that each item of spend is eligible and has been undertaken. And the other sort of main grouping is around tax credits. And actually, these are much more common in the United States than rebates. And sometimes people call tax credit rebates, but they are technically tax credit-based models where the jurisdiction, instead of cutting a check from the legislature’s budget or the government’s budget, it supplies a tax credit to the production. 

And that can either be monetized through selling it– so this is how Georgia works. The producer there will sell the credit to a taxpaying entity at a reduction on the dollar. And that way the government, the state government, is paying for the incentive through foregone tax revenue rather than cash. And the other option, which is less common, is a refundable tax credit, where this is similar to a rebate where the producer will give its credit to the state or the government and receive a rebate on that tax credit. 

What we’ve specifically looked at for Arkansas, again, we recommended a tax credit model, and specifically a transferable tax credit model, from the logic that the cash rebate model that Arkansas has had has not functioned in building a sustainable industry, so in our view, isn’t a good bet for the future for building a sustainable industry. So we looked at a transferable tax credit, which could expand the overall pool of incentive and be funded by foregone revenue rather than cash from the government, which has proven problematic. 

What we did hear a lot from the sector is that a lot of low-budget work is made in Arkansas, and those producers and investors were very nervous about the additional costs involved in a transferable tax credit. So we recommended a sort of a buyback clause, if you like, where rather than selling it to a third party, the producer of certain low budget material could sell it back to the state at a kind of named discount model. 

So that’s maybe going into too much detail. And I’m happy to send some literature that we have on this, but that’s the general picture and the specific recommendation. 

Representative Brian Evans My last question, Mr. Chair. And council staff can probably clarify this, but I’m curious how this has worked in other states. Going back, I meant to ask this on the first question, in regards to running these projects through economic development, I would think in most states that that would give the state FOIA protection. If you’re negotiating on a really big film project for your state, I would think that the film industry would want that. 

They wouldn’t want everybody to know that they’re about to come to Arkansas and film a big project and someone run ahead of them or so forth. But I’m not for certain that under Parks and Tourism that that same protection would be there. So have you seen that in other states where maybe production companies were hesitant to go into a state with a project because they might not have FOIA protection as they would here under economic development? 

Leon Forde It’s a really interesting question. I’m not sure I have, to be honest. I think productions, you’re completely right, productions do want secrecy and that’s largely for the larger productions. That’s about the intellectual property and keeping the value of what’s going to be in that film or TV show, keeping it under wraps so that when it hits the marketplace it’s new for people and it hasn’t been trailed six months earlier when everyone saw paparazzi pictures of the stars or whatever.

I mean, so you’re right. That’s absolutely a key concern. I haven’t seen any productions pulling back from specific jurisdictions because of FOIA though. I think that can be managed in certain ways. I mean, productions often use working titles. If they’re on a studio lot, that would be very stringent security around taking pictures and access and things like that. 

So, and I think we commonly see the amount of incentive given to certain production companies in the public domain. So I think that’s manageable. I don’t think it’s a deal breaker in that way, but we can also take a look at other examples and come back to you in case we can find anything. 

Representative Les Eaves Thank you, Mr. Speaker. Senator Dismang, you’re recognized. 

Senator Jonathan Dismang And I’m glad we’re kind of talking a little bit about the proprietary side of things because I’ve heard a little about that. I mean, that cuts two ways and I obviously think there’s a way to do it, whether it be in Economic Development or Parks, folks should know what they have to apply for, how to apply for it, and then to be honest, who else is receiving it, which is something that is very hard to track, at least from my understanding. 

If you talk to people in the industry in Arkansas, it creates a ton of confusion and a lot of folks just choose to not participate or not even look at the state because of how muddy the waters are or can be here. And I guess my question was, before we just got to the previous questions, is it not important that that information be made public even about who’s being awarded? I’m not saying we’re going to publish someone’s script or that sort of thing. But who’s participating in the program? 

Because number one, if there’s successful studios or whatever, maybe film crews, whatever, that are filming in Arkansas and finding success, we want the rest of the world to know that that’s happening, right? Because I think that helps create some awareness about what we have to offer. Whereas if no one really knows until after it’s all over with, I think that’s a whole different ball game. 

But so what do you see in other states as far as what’s considered proprietary and open to the public versus what everyone should know. Because number one, we are talking about tax credits. The people of Arkansas and the state legislature should have some accountability about how they’re rewarded and that sort of thing. Or we’re talking about rebates, one of the two. We have two programs in the state, both of those. So can you just talk about that idea of what’s proprietary and what’s not in other states and maybe how we should look at structuring that as we’re having this conversation about how we manage the program. 

Leon Forde Yeah. Thank you, senator. And you won’t be surprised to hear that it differs quite widely depending on the state and depending on the country, if we’re talking internationally. And we should highlight that Arkansas is competing internationally as well as with other states. 

So I think what other countries are doing is relevant as well. I mean, as you rightly say, this is public money. This is tax money and there is a duty to taxpayers to inform them of how this money is being invested. So I think there should be some kind of mechanism to show that in any system. And again, this differs very widely, but often we see reporting around on a production company level. 

So it might not be broken down at a project level. But there could be reporting annually that says, here’s how the tax credit has been invested this year and here is the list of entities that have claimed this credit. So I think that’s very important. I think where it becomes problematic for investors, and we’ve seen this not so much in the US but in some international territories where there have been systems that do ask for things like scripts or at the back end there is an acknowledgement that often film and TV can lead to tourism and sometimes there has been from systems a bit of an unrealistic assumption that they can maybe send camera crews onto set to get tourism footage or interviews with stars. 

And I think it’s that sort of side that gets problematic. 

And I think the other thing to flag is production budgets, this is all sort of commercially sensitive information and competitor sensitive information. So I think investors are very nervous about any data release that shows how much they’re spending on making film and television, what they are spending on staff. It’s just not something, and many businesses are in that same position, really wouldn’t want to have that out in the open market. But I think the sort of headline investment level is pretty well accepted as something that has to be released really. 

Arkansas’ current process

Senator Jonathan Dismang And just so kind of a follow-up, because I’m not sure how it works here, in your research, what you saw, were you able to kind of decipher how we awarded projects and how they were prioritized and how we set commitment levels and that sort of thing in your research? What did that look like? 

What was your conclusion to, well, the state of Arkansas prioritizes film projects based on these 10 criteria, we routinely do that, these types of projects aren’t going to be awarded, it’s a first come first serve? What did our current system look like for the amount of money that we had available for rebates and then also tax credits? 

Leon Forde Yeah, so I invite Meera to come in to this question as well, having worked on the economic side. But for example, and this may have just been the way the data was provided to us. I don’t think, for example, we had project titles, and I don’t think we had exact spend from those projects. So as I say, we estimated. What we did know is how much the how much the state spent on those projects. 

But we didn’t have a corresponding figure that said, for this incentive investment, this is how much exactly this project spent in Arkansas in qualifying terms. And that’s also important because there’s qualifying and non-qualifying spend. And I think for an incentive, there’s elements of that production spend that can be qualified through the incentive and there are elements that can’t. 

So every system has non-qualifying components. And what you’re missing by estimating based on the percentage of an incentive from how much the state has spent on it is that additional piece on the non-qualifying, so the whole picture isn’t that clear, really, in terms of the exact dollar amounts that get spent. I don’t know, Meera, if you’d add anything to that. 

Meera Sadler Just to say that the data that we received was by production company so we couldn’t assign it directly to specific project titles. And as Leon mentioned earlier, the only information that we received on that level of detail was the total incentive paid out and not anything on the amount of qualifying production expenditure that that related to by fiscal year either. 

Senator Jonathan Dismang And maybe this will help with the question a little bit, did y’all get to see what the form looked like for someone that was applying for an incentive in Arkansas? I mean, did you get to see the landing page or whatever it may be?

 I’m assuming there was some kind of rigorous process of yes and no questions and maybe more detailed questions about projects that were looking to do business in the state that then got submitted so that, again, the commissioner can make a decision on, We need to prioritize this and this needs to be accepted. 

Were you all able to see any of that to tie it back to, oh, this is the formula for why Arkansas awards projects, tax credits? Or was that fairly muddy? Not trying to lead, I just honestly don’t know. 

Leon Forde So we didn’t– and Meera, correct me if I’m wrong– we didn’t see that. We didn’t know in terms of if there were decisions made about, we only have this amount of funding and here are two projects, we’re going to go with this one. We didn’t have information on that. 

Senator Jonathan Dismang As far as it being at AEDC, I know we’ve had some of that question. When those decisions were made, were you able to tell who was making the decision? Was it solely up to the commissioner? Did it go through AEDCs board ultimately? Or how do they receive the tax credit ultimately? 

So you didn’t even get to see the application, so we don’t know how many were not awarded in a given year, essentially. Because we don’t know what the criteria was. We don’t how many were submitted. We only got to see who was awarded and only by a company level, not by a film level. Is that what I understood you to say? 

Leon Forde Exactly. 

Senator Jonathan Dismang All right. That sounds like something we may need to look into so we can get a better understanding of that process, especially since it’s related back to tax credits that were enabled by the legislature. So thank you. 

Representative Les Eaves Thank you, Senator Dismang. Senator Tucker. 

Senator Clarke Tucker Thank you, Mr. Chair, for recognizing a lowly non-member of the committee. I’ve got kind of two areas of questions for y’all. First of all, Leon and Meera, I just want to thank you all for your extensive work on this. I know it was a lot. And you all came overseas to come visit Arkansas and meet face to face with a lot of the stakeholders and legislators and everything. So thank you for your work. 

Comparing cap to neighbors

My first question, I want to follow up on what the chair asked about the cap. And if you look on page 10 of the proposal, there’s other places in the report where you comment that we compare favorably with our neighbors in terms of our percentage of the incentive, right? But when it comes to the cap, we don’t. 

And I just want to make sure the members see that we have a $4 million cap and our neighbors, Oklahoma is 30 million, Texas is 200 million over a two year period, so 100 million per year, Louisiana is 125 million per year and Mississippi is 20 million per year. From a cap standpoint, we are just not competitive with our neighbors. Is that fair? 

Leon Forde And thank you for that. Yeah, that’s exactly right. I’d say very, very uncompetitive. I think to the point where if you were an investor who had never considered Arkansas, you could look at the list– and there are lists that we and others produce of caps,– and just see it as being too low to make your shortlist really. 

And as you say, the headline rate, which is the percentage of qualifying expenditure that a production can get rebated or returned in some way in a tax credit, Arkansas does compete in those terms. It’s up to 30% in the current with add ons. So it’s competitive in those terms. It’s just the underlying, both the size of the cap and the uncertainty around that cap and its linkage to the Quick Action Closing Fund. 

Senator Clarke Tucker So obviously we want to attract out-of-state investment. You know, that’s a goal of ours. I’ve heard reports from Arkansans who have left the state and are producing, Arkansans who are producing films in other states because of the low level of our cap and the uncertainty around that. Did y’all hear any of those stories when you were on the ground doing interviews here? 

Leon Forde Yeah, we did. And it was usually Arkansans who wanted to work, obviously, wanted to work in the industry and either they left because they couldn’t get the type of role or the type of level of role they wanted in the state or they left because the sort of year round stability of the sector couldn’t support them. And yeah, so I think that we definitely heard that from crew members and filmmakers. You know, there’s a difference, in case you’re not aware, between the filmmaker side and the crew side. And I think both elements, we found examples of that sort of outflow of talent and workforce to other parts of the United States. 

Senator Clarke Tucker For me, a goal is, I want to attract out-of-state folks, but I just want to keep Arkansans here too. So thank you for that. Can you just kind of give the members who are here participating in this discussion a sense of how quickly $4 million goes in terms of film productions or like a season of television and that sort of thing? 

Leon Forde Yeah, so at a 25% rate, that would serve as a $16 million production spend thereabouts. And if you think Arkansas isn’t a market built for very large studio productions. You don’t have large stages like Georgia does. But one of those productions alone can be $200 million plus. And even putting aside that top end of the market, even lower to mid-budget work can be pretty larger than $16 million for one production. 

So it’s not an amount of investment that can create a year round stable, valuable industry. It’s just too low. But I think what it’s been doing– and there have been exceptions. There has been at least one very large production come to Arkansas, but generally it’s not been sufficient to attract larger productions. It’s just not at a competitive level. 

Senator Clarke Tucker As y’all showed, we have a strong ROI from the dollars that we do spend. And no one hears of decision-making in Georgia, including y’ all, but as Representative Eaves pointed out, they have no cap. And so my analysis of that is they decided that if the formula works at $1, then it works at a million dollars and $10 million and $50 million and so forth. 

So, okay, I have just kind of one other area of question. And it follows up on what Senator Gilmore and Speaker Evans and Senator Dismang were all asking about. And that is, you know, I’ve heard consistently from folks in the industry that they don’t know how films get selected, they don’t know how much money remains for either in a rebate or the tax credit, they do not know what jobs are available in Arkansas. 

And Senator Dismang asked you specifically what some other states have done. So I was happy to hear that discussion. I’ve heard in other states that they literally just post on the website as soon as a film gets approved so that crew in the state know what jobs are there to apply for. Is that something that you all have seen in your experience and how common is that? 

Leon Forde Yeah, it definitely does happen. There can be, again, going back to the discussion about confidentiality, it may not often name the film or may not often name the studio. It might be the special purpose vehicle company that has been set up to make that. But yeah, I think we definitely see information being circulated online through agencies or film offices saying this show is crewing up. 

And partly because it’s a competitive space. And I think particularly in recent years coming out of the COVID boom, although this maybe is tailing off slightly now, there’s been a huge amount of competition in some markets for staff, for crew. So I think a lot of productions have had to use those sort of film commission tools to advertise the fact that they’re crewing up and they’re looking for work. So yeah, I think we definitely have seen that in other places. 

Senator Clarke Tucker So there are definitely ways to communicate with the industry in ways that facilitate work where you’re also protecting the trade secret type information of the production, is what you’ve seen. 

Leon Forde Yes, yeah, yeah. And I should, as a caveat, for our study, we spent a lot of time looking at the economics of the system rather than the sort of crewing up side. So I think we’re much closer to that. But yeah, in terms of those job opportunities, it’s definitely something that we see elsewhere. 

Industry Advisory Board

Senator Clarke Tucker So really, my last question is about one of your recommendations. So expanding the film commission, that’s pretty clear. We don’t compare favorably with other states in just in terms of the number of staff, right? But another structural recommendation you all made was to create an industry advisory board. And I wonder if you all could just speak to that a little. 

I guess I’m inferring, but it seems to be some communication issues between the industry and the state and that could help facilitate that, more transparency and accountability for what projects are chosen. Or can you just kind of speak to what the purpose of that board would be? 

Leon Forde Thanks, senator. And I think just underlining the point we made earlier around the lack of cohesion in the sector. I think, when Meera and I were in Arkansas and meeting stakeholders, crew, people who work in the sector, people supply the sector, we definitely heard that point about there was a lack of knowledge between people and across people around what was coming into the industry, where opportunities were coming in. 

And I think there’s a couple of recommendations coming out of that finding. One is about the need for a shared strategy, the need for the industry to be on the same page, to be clear about what the state government wants to achieve through this sector and where the sector is going in terms of its niche, in terms of what are its ambitions. 

And I think the other part of that recommendation is around having the industry in some way be much more involved in not so much decision-making, but steering and maybe in some cases oversight. We see some film commissions in very major markets might have advisory boards. 

And frankly it’s a way of getting the industry both in-state and out to keep talking about Arkansas and to keep sharing information and making sure there’s a forum for leaders in the industry, the ones who might service productions when they come into Arkansas or state producers or filmmakers who might be the ones creating new intellectual property that could create value for Arkansas that there is some kind of forum for them to come together and have a shared understanding and a voice in where the sector’s going. And that can be relevant across a number of areas. 

The issue about getting information out to the sector, that’s something those producers, filmmakers, whoever was on that sort of board, can have a view on and help sculpt and shape, and also helping deal with challenges as they arise. So if there’s a particular production issue, learning from that in state, and if there are gaps in supply chain or gaps in the workforce, having a grouping like that can help come up with a strategy to escalate that. You know, how do we create more workforce in that area? 

And I think we see this in other markets and I think it’s a very positive way of learning from senior people in this sector and bringing them into the tent. And they wouldn’t get special access to the incentive or anything like that. There should still be rigorous application processes and independent application processes. But having that industry involvement in the strategic direction of the sector can only be a good thing if it’s well designed and organized. 

Senator Clarke Tucker That’s extremely helpful. Again, thank you all so much for your work. Really, really appreciate all your effort on this. Thank You, Mr. Chair. 

Representative Les Eaves Members, any other questions? Matt Miller, any questions you want to add? Thank you both for being here. We appreciate the hard work and for the presentation. All right, members, any other business? Seeing none, thank you for your participation. We are adjourned.